Court Liquidation

‘Official Liquidations’, ‘compulsary liquidation’ and ‘winding up by the court’ are also known as Court Liquidations.
 
A petition is applied to the court for a liquidation to commence, the following parties may present a petition; Creditor, contingent creditor, the company, shareholder, the minister and the registrar of companies. However, the majority of Court Liquidations are applied for by creditors.

For a petition to be applied for a Court Liquidation the grounds must be reasonable, such as;

• The company has “by special resolution resolved that the company be wound up by the court”.

• The company “does not commence its business within a year from its incorporation or suspends its business for a whole year”.

• The number of shareholders falls below two in a private company or below seven in any other company.

• The company is unable to pay its debts.

• The court is of the opinion that it is “just and equitable to wind up the company”.

• “opression” has been proved to the satisfaction of the court.